The real state of the consumer — Obamacare hits 6 million — Bankers fire back at the Fed

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M.M. REPORTING: THE REAL STATE OF THE CONSUMER– At first glance, it’s hard to tell from recent data just how people feel about their economic prospects. On the one hand, the Conference Board this week reported that its index of consumer confidence rose to 82.3 in March, the highest level since January of 2008. Happy days are here again, right? On the other hand, Gallup recently found that just 19% of Americans rate current U.S. economic conditions as excellent or good, while 34% say they are poor. Gallup also found that 44% say the economy is getting better while 51% say it is getting worse. Sounds pretty bad. And it is.

The somewhat misleading figure here is from the Conference Board, at least when taken out of context. Because while the number did hit a five-year high, it’s still pretty terrible. “We are still pretty weak by historical standards, it’s not a confident consumer,” Lynn Franco, top economist at the Conference Board, told M.M. “It’s still very volatile. People are not as negative as they were during the government shutdown but they are by no means very optimistic.” And there are much less optimistic numbers beyond the headline consumer confidence index figure.

The percentage of consumers who expect business conditions to improve over the next six months, according to the Conference Board, stands at just 18.1. Just 13.9% expect the job market to improve and only 14.9% expect their incomes to rise. Those are very weak figures that don’t promise a great increase in consumer spending. Pantheon’s Ian Shepherdson tells M.M. the consumer confidence figures are driven by the current jobless rate and direction of the stock market, telling us relatively little about future behavior.

Surveys such as Gallup’s and others offer a broader picture. “They have a more long-term view that captures the echo of the crash and the damage it did to balance sheets, employment and the rest of it,” Shepherdson said. Bottom line is that despite some positive-seeming headlines, the state of the U.S. consumer (beyond the affluent) is quite bad. So don’t expect a flood of spending later this year to drive faster growth. The housing market is also leveling off so growth is going to have to come from business spending, especially small businesses.

OBAMACARE HITS 6 MILLION — POLITICO’s Jennifer Epstein and Joanne Kennen: “More than 6 million people have signed up on the new insurance exchanges, and enrollment is surging with four days to go before the Obamacare signup deadline.

President … Obama broke the news Thursday on a call from Italy with thousands of activists and volunteers who have been helping people sign up across the country. … The total is lower than the 7 million goal set before the exchanges opened, but it beats revised expectations. And the pace of enrollment is a striking turnaround after the disastrous start last fall when HealthCare.gov and several of the state-run exchanges faltered and crashed.

“With outreach by both officials and their allies in high gear, the White House can expect the tally to keep climbing — especially as it announced this week that it would allow extra time and assistance for anyone who self-reported hitting a snag as they tried to sign up by Monday. Numerous polls have found the four year old law, which was passed without Republican support, is both misunderstood and unpopular. Democrats facing tough re-election fights next November have distanced themselves. … Higher enrollment numbers have not impressed Republicans, who plan more votes to repeal or change parts of the law. They also quickly noted that not everyone who signs up has paid their premiums: Insurers estimate that about 15 to 20 percent haven’t paid yet, so they aren’t fully enrolled, although the number is in flux.” http://bit.ly/1o5DtjH

GOOD NEWS: AUTISM CAN BE A WORKPLACE ASSET — WSJ’s Shirley S. Wang: “Some employers increasingly are viewing autism as an asset and not a deficiency in the workplace. Germany-based software company SAP … has been actively seeking people with autism for jobs, not because of charitable outreach but because it believes features of autism may make some individuals better at certain jobs than those without autism. …

“[A]ccording to disability experts, since 85% of adults with autism are estimated to be unemployed. … People with autism spectrum disorder — characterized by social deficits and repetitive behavior — tend to pay great attention to detail, which may make them well suited as software testers or debuggers … Autistic employees at SAP take on roles such as identifying software problems, and assigning customer-service queries to members of the team for troubleshooting” http://on.wsj.com/1pfaHKC

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES – Kate Davidson on the standoff between CFPB and the House Financial Services Committee [http://politico.pro/1i0v4Xt] … Pro's subscriber-only coverage -- and to get Morning Money every day before 6 a.m. -- please contact Pro Services at (703) 341-4600 orinfo@politicopro.com.

GOOD FRIDAY MORNING — Don’t miss the latest “Open Mike” in which Mike Allen visits the EMILY's List office for a conversation with President Stephanie Schriock on 2014, fundraising milestones, breaking glass ceilings, and even Ben & Jerry’s http://politi.co/1i9newl

DRIVING THE DAY — Personal income and spending at 8:30 a.m. are both expected to rise 0.3% … Univ. of Michigan consumer sentiment at 9:55 a.m. expected to rise to 80.5 from the initial reading of 79.9 … President Obama meets in Riyadh to meet with Saudi King Abdullah

**March Madness Hits Washington: The Obama administration, Democrats and Republicans in the House and the Senate, state and federal regulators, and private industry all see eye to eye. Insurance companies must not be treated like banks-especially when setting appropriate capital standards. Learn more at www.acli.com. **

AMAZING: WORKING MOM’S “OPEN LETTER TO GWYNETH PALTROW” — Mackenzie Dawson writes in the NYPost: “Dear Gwyneth, I really enjoyed your recent comments to E! about how easy an office job is for parents, compared to the grueling circumstances of being on a movie set. … As a mother of a toddler, I couldn’t agree more! ‘Thank God I don’t make millions filming one movie per year’ is what I say to myself pretty much every morning as I wait on a windy Metro-North platform, about to begin my 45-minute commute into the city. Whenever things get rough, all I have to do is keep reminding myself of that fact. It is my mantra” http://bit.ly/1iFPTJG

HOUSE READY TO CLEAR UKRAINE BILL — Bloomberg’s Kathleen Hunter: “The U.S. House of Representatives is ready to clear legislation that would provide aid to Ukraine and impose additional sanctions on Russian officials for the annexation of Crimea. The House’s next opportunity to act on the bill, which the Senate passed … with broad bipartisan support, would be in a session scheduled for 11 a.m., Washington time, today. The measure includes about $1 billion in loan guarantees and authorizes $150 million in direct assistance to Ukraine. It would impose sanctions against Ukrainians and Russians deemed responsible for corruption and violence” http://bloom.bg/1gwu1ko

BANKS FIRE BACK AT FED – FT’s Tom Braithwaite and Camilla Hall in New York, Martin Arnold in London and Gina Chon in Washington: “Bank executives and investors lashed out at the Federal Reserve … attacking its stress tests as ‘opaque’ after the results battered Citigroup’s share price and rattled banks around the world. Citi’s shares closed 5.4 per cent lower … the most since November 2012, after the Fed vetoed the bank’s request to increase its dividend and share buyback. … Some shareholders expressed anger at Citi executives.

“Mike Corbat, who replaced the ousted Vikram Pandit as chief executive in 2012, was charged with improving relations with regulators after a previous failure on the Fed’s annual capital assessment. A senior Citi executive said Mr Corbat was facing

‘unhappy staff, shareholders and some people who are both — like myself’. … Investors have also criticised the Fed, with institutional investors choosing to side with the banks rather than their regulator. ‘The transparency of this process is extremely poor to the investment community, to the industry itself and even to many in Washington,’ said one top 10 investor in Citi.” http://on.ft.com/O1QWbx

WRONG WAY TO FIX FANNIE/FREDDIE? — Graham Fisher’s Josh Rosner on the Johnson/Crapo GSE reform bill: “Unfortunately, the bill replaces Fannie and Freddie with an untold number of new government-sponsored enterprises by handing a massive taxpayer backstop to the nation's largest banks. These banks will also profit handsomely from large mortgage volumes as a result of the bill. … Rather than fix these problems, legislators seek to demolish the current mortgage market and build, from scratch, a new system that makes things worse. … They put at its center a new regulator, the Federal Mortgage Insurance Corporation, with a fundamentally conflicted mission — combining safety and soundness, affordable-housing goals and consumer protection.

“The bill will have the effect of increasing rather than reducing the concentration of lending in the hands of a few large banks. Under the legislation the government will also sponsor mortgage aggregators, insurance entities and a mutually owned securitization platform. Our largest financial firms will use their public homeownership mission to push for eased lending standards. In good times lenders and their shareholders will enjoy the profits generated by higher mortgage volumes, and in bad times the public will again be stuck holding the bag.” http://on.wsj.com/1jVlvue

CHRISTIE SAYS SCANDAL WON’T AFFECT 2016 CALL — POLITICO’s Katie Glueck: “New Jersey Gov. Chris Christie was adamant in a Thursday interview that the traffic scandal that has ensnared his administration won’t change the calculus on his future plans, including the possibility of a presidential bid. The Garden State Republican spoke with ABC’s Diane Sawyer … Before Bridgegate broke, Christie was considered a likely frontrunner for the 2016 GOP nomination. ‘I haven’t made a decision about 2016, and I don’t intend to make a decision about 2016 until a year from now, but it won’t have anything to do with what’s happened in the past 10 weeks,’ Christie said, noting that he never considered resigning as governor.

“‘What’s happened in the past 10 weeks, I think, will ultimately make me a better leader, whether it’s as governor of New Jersey or in any other job I might take in the public or private sector.’ The interview aired hours after the release of an internal review commissioned by Christie that cleared him of wrongdoing in the traffic scandal. The report skewered one of his former aides and an ex-appointee who were at the heart of the traffic lane closures in the New Jersey town of Fort Lee.’” http://bit.ly/1dxwVpn

LEHMAN ESTATE TO DOLE OUT BILLIONS — WSJ’s Patrick Fitzgerald:

“The team winding down Lehman Brothers Holdings Inc. said it would be doling out $17.9 billion to creditors more than five years after the investment bank's collapse

… The bulk of the latest payout, some $11.7 billion, is earmarked for third-party claimants, which include Lehman affiliates that are being wound down separately from the New York-based holding company.

“Another $5.1 billion of payments is going to creditors of Lehman units that were part of the Chapter 11 case. For those creditors, including a number of big hedge funds and Wall Street banks that bought up claims against Lehman on the cheap following its September 2008 collapse, the latest distribution will mean a speedier recovery on their distressed-debt investments” http://on.wsj.com/1h1dVdY

GOP WORRIED ABOUT ISSA IRS PROBE — POLITICO’s Rachael Bade and Lauren French: “It was supposed to be an easy win: The most loathed federal agency engaged in what amounted to discrimination against tea party-backed nonprofits.

But 10 months out from the first IRS scandal headline, some Republicans are unhappy with their party’s investigation — and they point a finger at the man who helped sustain the national uproar: Oversight and Government Reform Chairman Darrell Issa (R-Calif.).

“In background interviews with more than a half-dozen House Republicans … members expressed frustration that the investigation has become a spectacle that’s dragged on and distracted from serious charges. … Rep. Jason Chaffetz (R-Utah), who is hoping to replace Issa as chairman next year, expressed regret over the pace of the investigation, saying it’s ‘lost momentum.’ Issa will lose his spot because of term limits — though he might try to fight to stay. ‘There is a perception that if your case is rock-solid, it doesn’t need months to sort it out,’ said Chaffetz, who like several others, said the recent dust-up between Issa and top panel Democrat Elijah Cummings was unfortunate” http://politi.co/1lqnZ80

ALSO FOR YOUR RADAR –

THE FALL OF MEDINA-MORA — Bloomberg’s Dakin Campbell, Max Abelson and Ben Bain: “It looked like the start to another fine year for one of Mexico’s most powerful bankers. Citigroup Inc. Co-President Manuel Medina-Mora held court last month at a Mexico City breakfast where colleagues talked shop over mango, melon and banana. … Medina-Mora, 63, now faces another kind of dialogue. The [FBI] is examining Banamex, the bank’s unit in Mexico. Senators there said last week they want Medina-Mora, who’s also chairman of the franchise, to testify about $400 million of loans to oil servicer Oceanografia SA the bank called fraudulent.

“Citigroup is conducting its own probe and cited control issues unrelated to the fraud when it cut his 2013 pay this month to $9.5 million from $11 million. With Oceanografia seized by Mexico, the fraud will test a leader who has flourished at the intersection of the country’s financial and political power … Colleagues of Medina-Mora, who participated in the 2001 talks at a jungle resort where New York-based Citigroup discussed buying Banamex, said they were in awe of his shrewdness and hoped his career endures. http://bloom.bg/QkLcvD

REPORT: AMAZON CONSIDERS FREE STREAMING SERVICE — WSJ’s Greg Bensinger: “Amazon.com … is considering an advertising-supported streaming television and music-video service, a departure from its strategy of linking video to its $99-a-year Prime subscription service … The proposed service, which could launch in the coming months, could feature original and may include licensed content, these people said. As part of the service's development, Amazon has held talks with the creators of ‘Betas,’ a series about a Silicon Valley startup that Amazon co-produced last year, these people said.

“Amazon also plans to offer free music videos with advertising to people visiting its retail website, two of the people said. A search for Bruce Springsteen CDs, for example, might yield an option to watch the ‘Born in the U.S.A.’ video … Ad-supported video would be part of a broader move by Seattle-based Amazon to transform itself from a retailer into a force in multimedia. The company dominates e-commerce, but rivals like Google .. and YouTube and Netflix … have leapt ahead in streaming music and video. TV advertising is expected to generate $68.5 billion in the U.S. this year” http://on.wsj.com/1g5u9T6

MICROSOFT TO OFFER OFFICE FOR iPAD — NYT’s Nick Wingfeld: “One of the most lucrative software franchises in history, Microsoft Office, has finally come to the most influential computing device of the last few years, the iPad. Microsoft introduced the long-awaited suite of applications, which includes Word, PowerPoint and Excel, at an event here Thursday, where the company’s new chief executive, Satya Nadella, committed to making the software work on all major computing devices … Microsoft plans to create Office apps for tablet computers running Google’s Android operating system, too. …

“To some, the move is a refreshing sign of a new Microsoft, one slowly unshackling itself from an era when its major decisions were made in deference to Windows, Microsoft’s operating system. But skeptics wonder if Microsoft has waited too long, giving people who use iPads, especially business professionals, years to get used to life without it and giving an opening to start-ups and Apple’s competing products” http://nyti.ms/1dzfO72

CFPB DUELS WITH CONGRESS — WSJ’s Alan Zibel: “The Consumer Financial Protection Bureau is tangling with congressional lawmakers again, this time about Republican plans to air an employee’s discrimination complaint in public next week.

The consumer-finance regulator said Thursday it won’t participate in an April 2 House Financial Services Committee hearing where a CFPB attorney is expected to allege she ‘experienced gender discrimination and retaliation’ for filing an official discrimination complaint. An outside investigator who examined her claims is also scheduled to testify.

House Republicans invited two CFPB officials to the hearing.

“But the agency has decided it will not participate, citing a ‘confidential and ongoing employee grievance resolution process,’ spokesman Sam Gilford said. Testifying before Congress on such an issue, ‘would violate employees’ rights to privacy and due process and would undermine the integrity” of internal labor relations processes,’ Mr. Gilford added. Republicans said the CFPB should participate. ‘It’s unfortunate and deeply troubling that the CFPB refuses to answer questions about these allegations, particularly when the bureau’s grounds for doing so are patently frivolous in light of the fact that their employee is voluntarily appearing to tell her story,’ Rep. Patrick McHenry (R., N.C.) said.” http://on.wsj.com/1dSKw5D

** The life insurance industry proudly serves 75 million American families as they prepare for a secure financial future. Today, almost 20 percent of Americans' long-term savings are in life insurance products. Life insurers also provide products to employers of all sizes, giving businesses more stability and certainty, thus fueling economic growth. Learn about how the industry pays out $1.5 billion every day to American families and businesses at www.acli.com **